ECB Executive: Stablecoin Expansion Could Strengthen Dollar Dominance; Digital Euro is the Best Response
Taylor Wilson
A senior ECB official warned that dollar-pegged stablecoins could reverse two decades of declining USD reserve share, and named the digital euro as the eurozone's core countermeasure — the fight for monetary sovereignty has moved on-chain.
How did stablecoins become the dollar's accelerator?
The vast majority of stablecoins are pegged to the US dollar. This means → every new user who pays or stores value in stablecoins creates implicit demand for the dollar.
IMF data shows the dollar's share of global FX reserves fell from 70% at the start of this century to below 57% last year. Schnabel's argument: stablecoin adoption could reverse that twenty-year decline.
In plain terms = the share the dollar lost in the "old world" is being quietly reclaimed in the "new world" — not through stronger fundamentals, but through network effects, scale advantages, and first-mover advantage.
What is the threat to the euro?
Schnabel acknowledged the first blow lands on countries with weaker monetary credibility — citizens prefer dollar stablecoins, hollowing out local central banks' policy transmission and creating a vicious cycle.
Yet she warned that even a credibility-strong bloc like the eurozone is not fully immune. This reflects a deeper concern: if dollar stablecoins dominate long-term, the euro's role in tokenised finance and the international monetary system gets squeezed.
Put simply = even if the euro itself stays strong, the euro's "operating space" shrinks whenever on-chain settlement defaults to dollars.
What is the ECB's game plan?
Schnabel laid out a twin-pillar strategy: a consumer-facing digital euro (retail CBDC) plus an institutional-facing tokenised central-bank money (wholesale CBDC).
She called on central banks and regulators to "adapt regulation, monetary-policy implementation, and payment infrastructure in an agile manner." This means → the ECB believes regulating stablecoins alone is nowhere near enough — it must build its own product.
The ECB plans to launch the digital euro by 2029, with a pilot potentially starting as early as next year.
Why do the Fed and the ECB see this so differently?
Fed Governor Christopher Waller on Sunday called CBDCs "a dumb thing," arguing no problem requires a CBDC to solve. Instead, he said global stablecoin adoption would amplify Fed monetary-policy reach.
Schnabel's logic runs in the opposite direction: stablecoins amplify the dollar's influence, while posing a threat to every other currency bloc. This reflects a fundamental positional gap — the dollar is the beneficiary; the euro is on the defensive.
In plain terms = the Fed can win by doing nothing, so it feels no urgency to build a CBDC. The ECB must play active defence, so it treats the digital euro as a strategic project.
Is the future of stablecoins itself settled?
Schnabel hedged: whether stablecoins can carve out a lasting role in the financial system — the way money-market funds did 50 years ago — "remains to be seen."
ECB President Lagarde earlier this month criticised stablecoins sharply. Schnabel echoed her, stressing that many stablecoin advantages "stem from the technology they rely on, not from the instrument itself."
This means → the ECB's official read is that the real value lies in the underlying tokenisation technology. Stablecoins are just a temporary vehicle — one that CBDCs or tokenised deposits could replace entirely.
Content is for reference only, not financial advice.